Kazakhstan: Currency Woes Hasten Central Bank Boss Demise

Kazakhstan’s President Nursultan Nazarbayev has dismissed the head of the central bank as the national currency continues to lose value against the dollar.

Nazarbayev dismissed Kayrat Kelimbetov, who has presided over two major currency devaluations during his two years as chairman of the National Bank, on November 2 and replaced him with Daniyar Akishev, a presidential adviser and a former deputy chairman of the central bank.

“Confidence in the [central] bank and in the national currency, the tenge, has been reduced, and this cannot be permitted,” Nazarbayev told parliament in remarks quoted by his office. “A shortage of tenge liquidity is being felt in the country, and the volume of credit to the economy has been reduced.”

The move did not appear to do anything to restore the confidence of the market in the tenge, however. The currency fell below 280 to the dollar in trading on the Kazakhstan Stock Exchange on November 2 for the first time since mid-September, to close at 281.13.

The tenge has lost around 50 percent of its value since the National Bank abandoned its policy of maintaining the tenge in a managed corridor — a strategy Kelimbetov inherited from his predecessor, Georgiy Marchenko.

In September, the central bank stepped in and spent millions of dollars propping up the tenge again, after it fell to 300 to the dollar.

The National Bank had previously devalued the currency by 20 percent in 2014.

The depreciation of the currency has brought some benefit to exporters, but caused widespread economic pain to others, including retail traders and holders of dollar-denominated loans.

The currency has been under pressure from external forces ranging from the sharp depreciation of Russia’s ruble and the fall in global oil prices.

Kazakhstan’s economy is forecast to grow by just 1.5 percent this year compared to 4.3 percent last year.